Fundamental Analysis: ISM services index

ISM services index (Institute of Supply Management services index, formerly NAPM — National Association of Purchasing Managers).

To receive this index managers of the service sector are surveyed. An ISM service index below 50 indicates that the economy is softening. This index value is dependent on psychological factors. It should be noted when analyzing this index.

Frequency: at the beginning of each month at 18:00 (Moscow time) a day after ISM index is released.

Market importance: Middle.

Analysis: From the end of 2001 this index was in an uptrend. Since 2002 it has been above 50, signifying that the service sector is increasing. From the mid of 2004 this index began to form downtrend.

Conclusion:
This index signifies some weakness in the mid-term perspective, though it is still above the critical level at 50.0. In February sharp decrease in ISM Services was observed. Forecasts are adequate to the situation. ISM services index may be less positive than forecasted on the back of negative situation in the mortgage lending market.